The clever way to invest in ETFs for people close to retirement
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Effective Strategies to Increase Retirement Income when Close to Retirement
As you are getting closer to retirement, ensuring a stable and comfortable financial future takes on anew urgency. Pensionfriend’s Private Pension Plan (PPP) can be tailored to meet your specific needs, providing a range of benefits designed to maximize your retirement savings and offer significant flexibility.
Key Benefits of Pensionfriend's PPP:
Tax Efficiency: By holding the contract for over 12 years and withdrawing after age 62, you benefit from paying capital gains tax on only half of your gains. You can choose to hold the contract till age 85, and hence can start it even at age 72 to get this benefit
Expert Portfolio Management: Our portfolios are managed by a seasoned team with extensive experience handling substantial public sector funds, ensuring your investments are managed with expert care and precision.
Flexible Withdrawals: Enjoy the flexibility to make partial withdrawals during retirement while continuing to let your investments grow. This allows you to adapt to your changing financial needs without sacrificing growth potential.
Investment Flexibility: You can adjust your investment strategy as needed. Switch to lower-risk bonds if desired, or capitalize on higher interest rates. This flexibility helps you stay aligned with your risk tolerance and financial goals.
Beneficiary Protection: Add a beneficiary to your plan to ensure that, in the event of your passing, your family inherits your portfolio seamlessly and without incurring capital gains tax.
Cost Efficiency for Large Investments: Our low fees are especially beneficial for substantial investment amounts, allowing you to maximize your returns.
Comprehensive Retirement Planning: Receive expert advice on closing any pension gaps, determining the optimal retirement age, managing risk, and ensuring a smooth transition into retirement.
Understanding Your Retirement Needs
As you near retirement, it’s natural to have concerns about your financial security. You might be asking, “Do I have enough savings?” “When is the best time to retire?” and “How can I ensure my money lasts throughout my retirement?”
Why do you need a Private Pension Plan even if you are close to retirement?
Public pensions in Germany often fall short of providing a comfortable retirement. Self-managed investments through brokers frequently yield poor returns and lack tax benefits.
Optimize your pension incomeHere’s how Pensionfriend can help:
Assessing Your Savings Needs: For those over 50, it’s crucial to review your savings rate, as you have fewer years to save and for your money to grow. Pensionfriend analyzes your current situation, existing investments, and real estate to create a strategy that eliminates any last pension gaps, ensuring a comfortable retirement.
Evaluating Your Savings Value: Knowing how much you can safely withdraw as a pension is vital. In the current low-interest rate environment, traditional annuities offer less favorable returns compared to a well-managed stock portfolio, which can provide a higher and inflation-adjusted pension.
Risk Buffer: Your retirement age acts as your primary risk buffer. While conventional wisdom suggests reducing investment risk and shifting to bonds as retirement approaches, this strategy is especially suboptimal in the current low-interest rate environment. By maintaining your investment in stocks, you can potentially enjoy higher returns and build a larger financial cushion. After you decide on the retirement date you should review and possibly de-risk your portfolio and based on your overall financial outlook.
Investment Horizon: This is the time you have to invest, which typically extends well beyond your retirement age. If you plan to live into your 80s or 90s, your investment horizon is long. The longer your horizon, the more beneficial it is to stay invested in higher-yielding assets like stocks, as they offer better returns compared to bonds or annuities even in a worst case situation provided your investment period is long enough. Managing your investments wisely can lead to a substantial inheritance for your loved ones and make a big difference for your retirement income.
Example Scenario:
Imagine you’re 67 with 1 million euros in savings, a public pension of 1.100 €, and a fully paid-off house.
Annuity vs. Self-Managed Portfolio: An annuity might offer 2.200 € before tax or 1.900 € after tax. By managing your investments yourself, you could withdraw 4.000 € per month before tax, or around 3.600 € after tax, while your portfolio continues to grow. If the market declines, you can adjust your withdrawals accordingly and even consider using part of your portfolio to purchase an annuity if necessary.
Interest Rates and Annuities: With current low interest rates, engaging now in a PPP with a slightly more attractive now is unlikely ideal. Instead, consider evaluating annuity offers a few years before retirement and see if interest rates are higher and annuity payments hence much better.
Effective retirement planning is crucial, and it's never too late to start. Pensionfriend is committed to offering high-performing, flexible, and cost-effective pension solutions to help you make the most of your savings and achieve financial peace of mind.
In sum Pensionfriend's Private Pension Plan offers:
Investments by professionals with an unbiased, high-return, low-fee approach
Flexibility to withdraw funds at no cost at any time
Low cost especially for large investments
The ability to set key risk and choice parameters (such as maximum loss)
Easy change of beneficiaries with no capital gains tax for survivors
The ability to shop around in or at the start of retirement to get the best annuity and then get very advantageous tax rates.
Request more information about your pension options close to retimerent
We help you invest and retire safely with our low-cost, high-performance private pension plan.
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